Math 1030

Name _April Krommenhoek

Buying a House

Select a house from a real estate booklet, newspaper, or website. Find something reasonable
between $100,000 and $350,000. In reality, a trained financial professional can help you
determine what is reasonable for your financial situation. Take a screen shot of the listing for
your chosen house and attach it to this project. Assume that you will pay the asking price for
your house.

The listed selling price is _199,900 $_.

Assume that you will make a down payment of 20%.

The down payment is __39,980$__. The amount of the mortgage is _159,920$___.

Ask at least two lending institutions for the interest rate for both a 15-year and a 30-year fixed
rate mortgage with no points or other variations on the interest rate for the loan.

Name of first lending institution: ___America First Credit Union____.

Rate for 15-year mortgage: ___3.88%__. Rate for 30-year mortgage ___3.88%__.

Name of second lending institution: ____Wells Fargo Bank_______________________.

Rate for 15-year mortgage: _3.633%____. Rate for 30-year mortgage __4.212%__.

Assuming that the rates are the only difference between the different lending institutions, find the
monthly payment at the better interest rate for each type of mortgage.

15-year monthly payment: __1,143.00$_. 30-year monthly payment _752.00$__.

These payments cover only the interest and the principal on the loan. They do not cover the
insurance or taxes.

To organize the information for the amortization of the loan, construct a schedule that keeps
track of: (1) the payment number and/or (2) the month and year (3) the amount of the payment,
(4) the amount of interest paid, (5) the amount of principal paid, and (6) the remaining balance.
There is a Loan Amortization sschedule in CANVAS.

Its not necessary to show all of the payments in the tables below. Only fill in the payments in
the following schedules. Answer the questions after each table.
15-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 11/20/17 1153.71 484.16 669.56 159,250.44
2. . 12/20/17 1153.71 482.13 671.58 158,578.86
50. . 12/20/21 1153.71 377.26 776.45 123,834.35
90. . 4/20/25 1153.71 277.46 876.25 90,770.49
120. . 10/20/27 1153.71 194.28 959.43 63,212.45
150. . 4/20/30 1153.71 103.20 1050.51 33,038.39
180. . 10/20/32 1153.71 3.48 1146.75 $0.00. .
total ------- 8075.97 1921.94 6150.53 ---------

Use the proper word or phrase to fill in the blanks.

The total principal paid is the same as the ___Mortgage loan amount___.
The total amount paid is the number of payments times ___Monthly payment___.
The total interest paid is the total amount paid minus ___total principle paid____.

Use the proper number to fill in the blanks and cross out the improper word
in the parentheses.
Payment number ___1__ is the first one in which the principal paid is greater than the
interest paid.

The total amount of interest is $____ (more or less) than the mortgage.

The total amount of interest is ___68.7_______% (more or less) than the mortgage.

The total amount of interest is ___31.3____% of the mortgage.

30-year mortgage

Payment Payment Payment Interest Principal Remaining

Number Date Amount ($) Paid ($) Paid ($) Balance ($)
1. . 11/20/17 752.46 517.07 235.39 159,684.61
2. . 12/20/17 752.46 516.31 236.15 159,448.47
60. . 10/20/22 752.46 467.69 284.77 144,361.50
120. . 10/20/27 752.46 406.83 345.63 125,477.89
240. . 10/20/37 752.46 243.31 509.15 74,740.95
300. . 10/20/42 752.46 134.49 617.97 40,978.29
360. . 10/20/47 752.46 2.43 747.61 $0.00. .
total ------- 5267.22 2288.12 3066.67 ---------

Payment number _146 is the first one in which the principal paid is greater than the interest paid.
The total amount of interest is $__778.55___ (more or less) than the mortgage.

The total amount of interest is ___25.3___% (more or less) than the mortgage.

The total amount of interest is __74.7_____% of the mortgage.

Suppose you paid an additional $100 a month towards the principal

The total amount of interest paid with the $100 monthly extra payment would be
$__86,419.80__.

The total amount of interest paid with the $100 monthly extra payment would be
$___24546.01___ (more or less) than the interest paid for the scheduled payments only.

The total amount of interest paid with the $100 monthly extra payment would be
___22.1__% (more or less) than the interest paid for the scheduled payments only.

The $100 monthly extra payment would pay off the mortgage in __24__ years and __8__
months; thats __66__ months sooner than paying only the scheduled payments.
Summarize what you have done and learned on this project. Because this is a math project, you
must compute and compare numbers, both absolute and relative values, that havent been
compared above. Statements such as a lot more and a lot less do not have meaning in a
Quantitative Reasoning class. Make the necessary computations and compare (1) the 15-year
mortgage payment to the 30-year mortgage payment, (2) the 15-year mortgage interest to the 30-
year mortgage interest, (3) the 15-year mortgage to the 30-year mortgage with an extra payment,
and (4) the 15-year mortgage to the 30-year mortgage with a large enough extra payments to
save 15 years and have the loan paid off in 15 years. Also, keep in mind that the numbers dont
explain everything. Comment on other factors that must be considered with the numbers when
making a mortgage.

Your submission must be in pdf format. Refer to the assignment rubric to see how you'll be
graded.

1) For the house that I would like to buy the 15 year mortgage would be done
soon but I wouldnt be able to pay that much a month for 15 years. But I would
be able to afford the 30 year better. However this would of course depend on
how much I make from my job.
2) The 15 year mortgage is much smaller. Because there is not a long enough
time periods to have the interest builds up like in the 30 year mortgage. The 30
year mortgage is a little over 2 times the amount of the 15 year .
3) If this was the real situation of me buying this house I would do the 30 year with
the extra 100. In my case it would still be affordable and it would be all payed
for soon than 30 years. It probably works the same for the 15 year but I
wouldnt be able to afford the 100 extra on top of the 1,000 something monthly
payments that it is without the extra 100.
4) If you payed a big enough extra payment each month on the 15 year, why
wouldnt you just take what you have and pay most of the house off then you
would only need to barrow an even smaller amount from the loan company and
only need to pay back money for 2 years or something like that. With the 30
year it would depend on how much more a month you would pay, in my case
the 100 extra gets the mortgage payed off in 24 years. For it to be payed off in
15 from the 30 year it would have to be 500 extra each month to save you 15
years.